Buyers - do not pay the prices the greedy sellers want

Conrad

I've been in mortgages since 1991 and can say with some conviction that prices are falling.

Why? Because a large proportion of the money supply has been removed from the mortgage supply chain. You cant expect a fire to burn as brightly with less fuel - it's really that simple.

Greedy sellers somehow consider 'thier' property to be special, which is a common psychological response given thier emmotional engagement with thier property.

1) International money markets have dried up so there's a lot less money available to lend

2) LTVs are being reduced and 100% lending is all but dead and some lenders pulling back from 95%

3) Income multiples and other criteria mean lenders are advancing applicant lower sums

4) The cost of borrowing has gone up since the end of the boom


Some sellers seem to inhabit a parallel universe. The worst are those that blame agents for being unabkle to achive thier sellers greedy aspirations.

Im particularly amused by the "prices wont fall in my area camp". EVERY area has a proportion of people that retain this view.
Well in the last crash homes in Hadley Wood, Herts, a mega money enclave, halved, so it really can happen anywhere.

beecher

I'm finding the level of denial interesting, and think it is fascinating that vendors all seem to think their house is the nicest in the street! The very people who accept prices doubling think that they can't half!

The ones blaming the agents have just passed denial and moved onto anger - by summer time people will have reached acceptance and either dropped their selling prices significantly, or taken their house off the property market.

Benefits_Blagger

Conrad wrote: »

I've been in mortgages since 1991 and can say with some conviction that prices are falling.

Why? Because a large proportion of the money supply has been removed from the mortgage supply chain. You cant expect a fire to burn as brightly with less fuel - it's really that simple.

Greedy sellers somehow consider 'thier' property to be special, which is a common psychological response given thier emmotional engagement with thier property.

1) International money markets have dried up so there's a lot less money available to lend

2) LTVs are being reduced and 100% lending is all but dead and some lenders pulling back from 95%

3) Income multiples and other criteria mean lenders are advancing applicant lower sums

4) The cost of borrowing has gone up since the end of the boom


Some sellers seem to inhabit a parallel universe. The worst are those that blame agents for being unabkle to achive thier sellers greedy aspirations.

Im particularly amused by the "prices wont fall in my area camp". EVERY area has a proportion of people that retain this view.
Well in the last crash homes in Hadley Wood, Herts, a mega money enclave, halved, so it really can happen anywhere.

excellent post

i love the way how on the threads on here, we keep hearing "my EA is totally !!!!!! and unhelpful and wont get me viewers, yet when i used them LAST YEAR I had 20 viewers in fortnight".

they dont realise the key words are "LAST YEAR"

nelly_2

Benefits_Blagger wrote: »

excellent post

i love the way how on the threads on here, we keep hearing "my EA is totally !!!!!! and unhelpful and wont get me viewers, yet when i used them LAST YEAR I had 20 viewers in fortnight".

they dont realise the key words are "LAST YEAR"

Selling a house is soooo last year

Conrad

Since 1991 in this business I hear at least once per day "my house is better than the one that sold in my street last month".

Funnily enough my neighbour was comparing her pad to others the other night and it was farsical. She only sees the good and totally ignores all the bad points - really laughable - what is it with some people!

neas

I really want to ask one of the "My house is obv worth this much" folk.

Just one question

Do you feel lucky punk? Well do ya huh?

movilogo

If a single seller is greedy, then FTBs can buy someone else's property. Sellers can be greedy as long as their greed is fulfilled. Since, still most sellers are unwilling to reduce price, it means FTBs are probably over optimistic.

I too believe that price will fall but definitely to not that level where everyone can buy a house. And if there is a crash, it will combine with downturn in economy i.e. people losing jobs. So, getting into property ladder will be even more difficult, albeit fall in price.

Before you fret about expensive house price, note the fact this price has been sustainable because
1. People get credit easily without stringent check on ability to pay
2. Some people work hard and earn enough qualify for mortages

So, instead of hoping for a crash, FTBs need to try raising their income as well

EdInvestor

Of course the OP is a finance broker and it's the brokers who are the real victims of the credit crunch as they have no products (mortgages) to sell any more.

The only way they can get back into business is to get prices down so that flaky sub prime buyers (their clients) don't need to borrow so much.

So their judgments on the state of the market need to be taken with a pinch of salt by those people who are in a class above.

Catblue

EdInvestor wrote: »

So their judgments on the state of the market need to be taken with a pinch of salt by those people who are in a class above.

You mean the buy-to-let merchants who absolutely have no interest in talking the market up? :rotfl:

Gorgeous_George

I agree with much of Conrad's post but find that referring to sellers as greedy is a little harsh. In any market-place, sellers want as much as possible for their product and buyers want to spend as little as possible. Housing has an additional factor which is money supply.

Maybe it is mortgage brokers, estate agents and anybody else earning commission based on selling price that are greedy. A seller seeks professional advice on value before marketing their property and most follow this advice verbatim.

When I sell anything, I decide, with the help of experts if necessary, how much I want to sell it for. I advertise the item for sale and wait for offers. If no offers are forthcoming I review the price/advertising and remarket accordingly.

For example, I have a car that I might like to sell. Realistically, it is only going to attract an offer of £1,000 but I will not let it go for less than £1,500. I shall market it at £1,999 for a month or so and if it doesn't sell, I'll try £1,750. I may then reduce it to £1,500 but if it still doesn't sell, I shall keep it because it has a value to me.

With houses, recent FTBers will have mortgages that are close to 100% of the value of their homes (because greedy mortgage advisers told them it was ok to do so). They may wish to move to a larger house or to STR but they will have to achieve a certain figure to make this possible. They cannot reduce their asking price without realising a massive debt. A debt that they were encouraged to take on by those in the mortgage game.

GG

merlinthehappypig

It's not simply a matter of greed, it's adjusting to a new reality.

Many sellers, especially those with properties that have been on sale for a year or more, have already 'fixed' a price in their minds and will find it difficult to adjust to their house being worth less.

Bear in mind that most people are not as financially capable as many of us on here. They genuinely believed that prices couldn't go down and aren't always capable of realising that if their house is worth less they can claw the difference back on the next house.

We have been 'encouraged' to believe that a valuable house makes us rich. Most people can't comprehend the difference between a paper worth and an actual worth. Many people have been encouraged to borrow against an asset which can not normally be realised.

Yes, some of this is greed, but much of it is naivety with a healthy dose of stupidity, not helped by agents, lenders and the government. Much of the greed can be attributed to those who encouraged this madness. When you see your friends & neighbours making huge paper profits it must be hard for people not to get swept up and make the wrong decisions.